Innovation milestone

Thanks to Mark Perry of the blog Carpe Diem for directing me to this link.

Amazon.com now sells more Kindle ebooks than print books.

Introduced less than four years ago, the Kindle has quickly become Amazon’s top selling product, and now digitised books for the reader have become more popular with its customers than their paper and ink fore-runners.

Ebooks stumbled along for years, never quite taking hold and then Amazon came along and put together a product that made it work.

Looking back, the success seems like it should have been a foregone conclusion.  But, I don’t remember many people who thought that four years ago.  An iPod for books?

This is a great example of a black swan.  An experiment that didn’t seem to hold a lot of promise, but is now changing the way we read things.

I can attest from my own experience, that I’ve sold more Kindle versions than print copies of my own book from Amazon.com.

“Your Teacher Said What?”

Based on Steve Forbes recommendation, I’m looking forward to reading Joe and Blake Kernan’s new book, Your Teacher Said What?!: Defending Our Kids from the Liberal Assault on Capitalism.

The Dennis Principle

Cover of "How to Get Rich: One of the Wor...

Cover via Amazon

In 1969, Laurence Peter and Raymond Hull wrote the book, The Peter Principle and since then the observation that every employee tends to rise to his or her level incompetence has been synonymous with the title of their book.

The idea is that folks tend to perform competently at some levels and then are rewarded with promotion until they eventually reach a level where they are no longer competent.

If only that were true.  In my experience, competence is not what is rewarded with promotion.

I think Felix Dennis describes the scene more accurately in How to Get Rich, when he discusses delegation (p. 186):

It used to be surprising to me why so many people appeared to have a problem with delegating.  But I finally figured it out, and the answer isn’t a pretty one.  It concerns our old bugaboo, ownership.

If you own a company and that company’s purpose is to make you wealthy, you will be content, delighted even, for any amount of glory to go to anyone who works there, providing you get the money.  It is in your best interests to delegate whenever it makes sense in such circumstances.

If you do not own the company, or any part of it, then it is possible you are only a senior manager because you like power. It is not true of everyone, of course. But often enough. You like bossing people about.  You enjoy telling them what to do.  If that is the case, then you might be understandably reluctant to delegate real power or opportunity, in case the person you delegate to proceeds to excel. This, in turn, may well demonstrate to the rest of the company what a ho-hum manager you really are.

This is a warped way of thinking. But I am convinced it lies behind much of the reluctance to delegate I have encountered in my business life.  I used to be surprised at this reluctance of others, both in and out of my own companies.  Now I’m not surprised at all.

Bossy people and glory hounds are mostly interested in building a power base so they can have yet more people to boss about. It’s pitiful and a little sad, but we have all seen it.  We saw it in school. We saw it in the playground.  We saw it in college. And we saw it in our first job. If you are observant, you have been seeing it nearly all your life.

This type of managerial toad will often talk about training and delegation in sepulchral tones, but then, as the old proverb tells us, “the Devil can quote scripture for his own purpose.”

You can’t deal with bossy, puffed-up sods who won’t train you and won’t delegate.  You can only move departments or change your place of work.  It isn’t worth the time to do anything else.

Based on my experience, such folks tend to reward inputs (did you do it the way I said to do it?) instead of outputs (was it successful ?).  They somehow manage to assume credit for successes (which they then don’t easily share) and masterfully distance themselves from failures. They are expert horn tooters.

I’ve often scratched my head at the behavior.  It seems counterproductive.  But silly me, I viewed it from the owners perspective for some reason.  As Dennis lays it out, it makes perfect sense.

What’s really sad to me is that this is the type of leadership that has been taught to us since we were young.  I often struggled when myself or my friends attended leadership development camps or training.

My intuition told me that even the leaders of the camps didn’t really have a grasp on true leadership.  What they discussed was more of the bossy/glory hound leadership — how to stand tall and speak with authority and how to make yourself look busy, even when you don’t know what you’re doing.  It’s about managing up and improving your image.

I’ll add my own observation to Dennis’.  These types of leaders tend to gravitate to organizations that are already successful.  They say things like, “we are professional managers that will take over where the founders left off” and “we can take the business to the next level”.

In reality, it’s the organization’s prior success that allows it entertain such leadership for awhile.

I prefer Dennis’ style of leadership.

Follow-up questions for “The Price of Everything”

I recommended reading Russ Roberts’ book The Price of Everything here.  Today, Russ Roberts posted a set of study questions used by Steven Horwitz in his class.

I’m keeping a set handy to spur a discussion for those who I get to read the book.  The questions are below the fold. Continue reading

Felix Dennis on Talent

As I wrote about in this post, successful people have the resilience to recover from failure and try again.  I think they also have superior talent management capabilities.  Felix Dennis, who speaks much more from experience than I, agrees.

In his book, How to Get Rich, Felix Dennis describes five business start-up errors.  The fifth error is skimping on talent.  I like what Dennis has to say here (p. 105):

If you are determined to be rich, there is only one talent you require.  Can you think of it before your eyes skim down to the next paragraph?

Right.  You need the talent to identify, hire and nurture others with talent.

Sometimes, to ensure that a talented individual will work for you, or will stay working for you, you need to be flexible.  Money is not always the great motivator here.  Talented people want a good salary, of course, but surprisingly often they are more attracted to new opportunities and challenges.

When you come across real talent, it is sometimes worth allowing them to create the structure in which they choose to labor.

You must identify talent.  Then you must move heaven and earth to hire it.  You must nurture it, reward it properly and protect it from being poached.  If necessary, dream up a new project.  Better sill, get the talent to dream it up.

I’ve noticed that some leaders see themselves as the talent.  They do their best to outshine others and sometimes they reach good levels of success.  For awhile. Until the next beacon outshines them.  Then these guys are taken out.

Other leaders see their job more like what Dennis describes.  Jack Welch, former CEO of GE, was classic example of this.  These types of leaders seem to have better odds at superior, long-lasting success.  These guys tend to go out on their own terms.

Random Thoughts from Thomas Sowell

I always enjoy Thomas Sowell’s Random Thoughts columns.  He put several pages of his random thoughts on the passing scene observations in his back of his book Dismantling America.  Here’s a few of my favorites.

One of the painful signs of years of dumbed-down education is how many people are unable to make a coherent argument.  They can vent their emotions, question other people’s motives, make bold assertions, repeat slogans–anything except reason.

Wal-Mart has done more for poor people than any ten liberals, almost nine of whom are almost guaranteed to hate Wal-Mart.

Many colleges claim that they develop “leaders.”  All too often, that means turning out graduates who cannot feel fulfilled unless they are telling other people what to do.  There are already too many people like that, and they are a menace to everyone else’s freedom.

For university presidents, as for politicians at all levels, one of the most valuable talents for the success of their careers is the ability to say things that make no sense, with a straight face and in a lofty tone.

Perhaps one of the scariest aspects of our times is how many people think in talking points, rather than in terms of real world consequences.

Some of the biggest cases of mistaken identity are among intellectuals who have trouble remembering that they are not God.

Some people are so busy being clever that they don’t have time enough to be wise.

Double team

Walter Williams and Thomas Sowell are double teaming the electorate.

Heres’ the opener from Walter Williams’ column this week, Changing America.

Dr. Thomas Sowell, in “Dismantling America,” said in reference to President Obama, “That such an administration could be elected in the first place, headed by a man whose only qualifications to be president of the United States at a dangerous time in the history of the world were rhetoric, style and symbolism — and whose animus against the values and institutions of America had been demonstrated repeatedly over a period of decades beforehand — speaks volumes about the inadequacies of our educational system and the degeneration of our culture.” Obama is by no means unique; his characteristics are shared by other Americans, but what is unique is that no other time in our history would such a person been elected president. That says a lot about the degeneration of our culture, values, thinking abilities and acceptance of what’s no less than tyranny.

And the closer:

Fighting government intrusion into our lives is becoming increasingly difficult for at least two reasons. The first reason is that educators at the primary, secondary and university levels have been successful in teaching our youngsters to despise the values of our Constitution and the founders of our nation — “those dead, old, racist white men.” Their success in that arena might explain why educators have been unable to get our youngsters to read, write and compute on a level comparable with other developed nations; they are too busy proselytizing students.

I was disappointed with both tickets in the last presidential election. I didn’t think any of the candidates were yet qualified for the highest offices. When I pointed that out to folks, I got an assortment of non-sense responses.

One popular response: “He ran a great campaign.”  That’s a qualification for President?  Would you hire a head football coach for the NFL based solely on a good job interview?

Another popular response:  “I want an articulate President.” To which I’d respond, can you listen to his last speech and explain what he said?  I could rarely make out what he was saying. Everybody was in awe of his style, not his substance.

Maybe that ties back to Williams’ comment about our education system. We can no longer differentiate between style and substance. Don’t get me wrong, not many politicians actually deliver much substance. But that’s our fault. We have such low expectations of them.

More common responses:  “He seems like a good guy. I’d like to have a beer with him.”   That’s how you choose your President? In that case, most of my buddies should be President! Again, what are we learning in our education system?  The sad thing is that a lot of people would let that pass as an acceptable answer, when they should let that person know that he should not vote until he he becomes an adult.

Here’s a short list of what I would like to know when considering who to vote for President:

  1. What’s their view on role of government and how does that fit with the Constitution?  It’s amazing to me that we let people in office when we’re not entirely clear on this.
  2. What does freedom mean?  Of the two following statements, which best matches their view of freedom?  The ability for individuals to make decisions that suit their needs and preferences…
    • …free of coercion from others.
    • …free of negative consequences that might result from such.
  3. What do they think of the Constitution?  What is its purpose?
  4. What is the process for changing the Constitution from it’s original intent?
  5. What actions have they taken in the past that support or contradict their stated views?
  6. What makes for a good federal judge and Supreme Court justice?
  7. What does “uphold the Constitution” in their oath of office mean to them?
  8. Where does the candidate think government has overstepped it’s boundaries in the past?
  9. What do they like about the U.S. and dislike about it?
  10. Why do they think Rome fell?
  11. How have they led in the past against politically unpopular things?
  12. What do they think about capitalism?  Property rights?
  13. Why do they think the U.S. is the wealthiest country ever?

Those are a few of the questions I would like to know the answer to before casting my ballot.

A different kind of evolution

How did we get here?

I carry a Blackberry, use an iPod touch, live in a home with indoor plumbing, central air and heat, kitchen, refrigerator, washer and dryer.  That doesn’t even scratch the surface of modern conveniences. We have an amazing standard of living.  A common theme on this blog is recognizing that.  We too often forget it.

Years ago, while watching a Discovery channel show on how early homo sapiens lived, it occurred to me that early homo sapiens had the same basic resource and constraint as us.  They had 24 hours in the day (maybe a second longer) and needed one to two thousand calories.

Until they learned to cook, they chewed meats for hours to begin the digestion process. Cooking was a major innovation, allowing them to reduce the time spent ingesting food by hours.  This freed up time to do other things, like make better tools for hunting and the Internet.

To get from there to here, we’ve basically found ways save more time and make better tools.  Now we can accomplish much more in 24 hours and the effort we need to expend to consumer 2,000 calories is minimal.  Such innovations come from trade and specialization.

But trade and specialization are not the only mechanisms that took us on our path. Other things helped as well.

Things that are so natural and innate to us that they are invisible.  So few people see them or understand them or think much about them.  Those things are the rules that govern how we interact with each other.

Our interactions with each other have evolved to allow us to get along and be productive, so says F.A. Hayek in The Fatal Conceit (p. 20):

That rules become better adjusted to generate order happened not because men better understood their function, but because those groups prospered who happened to change them in a way that rendered them increasingly adaptive.  This evolution was not linear, but resulted from continued trial and error, constant ‘experimentation’ in arenas where different orders contended.  Of course there was no intention to experiment — yet changes in the rules thrown forth by historical accident, analogous to genetic mutations, had something of the same effect.

Amazingly enough, we really don’t know why the rules work or why we do what we do (p. 23):

Though in a sense based on human experience in that they [custom and tradition] were shaped in the course of cultural evolution, they were not formed by drawing reasoned conclusions from certain facts or from an awareness that things behaved in a particular way.  Though governed in our conduct by what we have learnt, we often do not know why we do what we do.

And it just so happens that the successful experiments displace the unsuccessful ones (also p. 23):

Learnt moral rules, customs, progressively displaced innate responses, not because men recognised by reason that they were better but because they made possible the growth of an extended order exceeding anyone’s vision, in which more effective collaboration enabled its members, however blindly, to maintain more people and to displace other groups.

I’m looking forward to reading the rest of this book.

“The Price of Everything” by Russell Roberts

The Price of Everything: A Parable of Possibility and Prosperity

This book is my new reading recommendation for folks who want to dip their toes into basic economics.  I will continue to recommend Thomas Sowell’s Basic Economics, but I think Russell Roberts book will be a good precursor to Sowell’s book.

I’m testing it with some friends now and will see how it goes.

I enjoy Russell Roberts work on the blog Cafe Hayek, the EconTalk podcast, the rap video The Fear of the Boom and Bust and his paper on the causes of the financial crisis.

I put off reading this book because it’s economics told through a fictional story and I was little leery of the fiction aspect. I shouldn’t have been.  It’s a great read and the fiction is good.  The story is compelling and the economics discussions in the book are interesting.  I read it in three days.

Russell Roberts comes from a free market perspective, but in my experience with his other work he is fair in capturing the opposing viewpoints and addressing the real concern, he does so in this book as well.

Anybody who has had an economics discussion with friends will likely appreciate the discussions Ruth Lieber has with her students and Ramon.

At $10 for the paperback, this is a steal and makes a great gift for anyone with a mild interest in economics or politics.

Addendum: I forgot to mention that I also enjoyed the Sources and Further Reading section of the book.   It was interesting to learn the back story on the inspiration behind certain elements of the story and I plan to work my way through the further reading Roberts suggests.  I’m already well into one of his suggestions.

Addendum II: Thanks to Professor Roberts for linking to this review on his blog, Cafe Hayek.  As he points out in that post, Amazon.com is discounting the price of the book by 40%.  At that price it’s worth considering buying a dozen or so to have them on hand to give to folks as econ discussions come up in the daily course of events.  “Here, give this a read…let’s talk about it when you’re finished…then pass it on. “

Gift Ideas

Are you looking for gift ideas for someone who falls in the moderate conservative to libertarian part of the political spectrum and might have an interest in popular economics or gaining a better understanding of how the political economy around them works?

You won’t go wrong with the following book choices.

  1. Basic Economics: A Citizen’s Guide to the Economy by Thomas Sowell
  2. Applied Economics: Thinking Beyond Stage One by Thomas Sowell
  3. The Armchair Economist by Steven Landsburg
  4. Economic Facts and Fallacies by Thomas Sowell
  5. Really, anything by Thomas Sowell is good.
  6. More Sex is Safer Sex by Steven Landsburg
  7. The Undercover Economist by Tim Hanover
  8. The Price of Everything by Russell Roberts

There are two books on the list I haven’t read yet, but will soon and I have read much other stuff by the authors and can vouch that these are good.

Update: W.E. Heasley offers these suggestions (I’ve read one of these and will add the rest to my reading list):

  1. Getting Off Track, John B. Taylor.
  2. Super Freakonomics, Levitt and Dubner.
  3. The Fatal Conceit: The Errors of Socialism, F.A Hayek.
  4. A Conflict of Visions, Thomas Sowell.
  5. The Federalist Papers in Modern Language, Mary Webster
  6. Anarchy, State, and Utopia, Robert Nozick.

For fiction, dave recommends Cryptonomicron and The Baroque Cycle by Neal Stephenson.

Also, I’d like to add one more to the list: P.J. O’Rourke on the Wealth of Nations.